Private Medicare Plans Use Stars To Navigate For Profits

The latest edition of the federal government's annual reviews of private Medicare health plans came out Wednesday, just in time to help seniors choose plans during this year's open enrollment period that starts Saturday and runs through Dec. 7.

What's new this year is that consumers aren't the only ones paying close attention: Health plans stand to make big bucks by scoring higher in Medicare's rating system.

The reviews — a 5-star ratings system based on 36 measures, such as rates of breast cancer screening — were created to help seniors become better shoppers. But the 2010 federal health law tied the ratings to cash bonuses, too.

Now, even middling plans — those with three stars — can get in on the money.

The latest ratings show an overall increase of about one-quarter of a star to an average of 3.44 stars in 2012. Medicare officials expect plans to do even better next year.

Even a small increase can be a big deal for insurers' bottom lines — the bonuses should total billions of dollars next year. "It's like Christmas in October" for health plans, said John Gorman of Gorman Health Group, a consultant to Medicare Advantage plans, which contract with the federal government to administer Medicare benefits.

Now, the insurers are paying enough attention to foster a crop of consultants who specialize in reaching for the highest star ratings. More than a dozen companies were peddling such wares in the corridors of a Washington hotel during a conference hosted last month by America's Health Insurance Plans, an industry group.

Companies, such as OptumInsight, a subsidiary of UnitedHealth Group, Health Dialog, a Boston-based analytics firm, and MedAssurant, a health plan data company, are angling for star business.

Stars "used to be a cost center," a salesman for MedAssurant said in an interview at the conference. But, he said, now that the ratings are tied to cash, "the quality people" — health plan officials in charge of measuring things like rates of urinary incontinence and diabetes screening – "are trying to get out of the basement and into the boardroom."

Is any of that actually good for consumers? Ilene Stein, of the Medicare Rights Center, an advocacy group, said she was hopeful that all the focus on bonuses would ultimately improve the quality of care seniors receive.

And, some health plans — especially those with top scores — are watching more plugged-in baby boomers joining the Medicare rolls. They hope the latest generation of seniors will pay more attention to the stars, said Steve Youso, the chief administrative officer of Security Health Plan, a 5-star Medicare Advantage plan affiliated with the Marshfield Clinic in Wisconsin.